One prominent feature of osteoarthritic cartilage is an inherent failure to retain proteoglycan-rich extracellular matrix. The hypothesis of our laboratory has been that part of the overall failure in this degenerative disease is due to a change in number or function of matrix receptors. Our work has demonstrated that chondrocytes tether proteoglycan aggregates through the binding of hyaluronan (HA) to the receptor CD44 and that chondrocyte matrix assembly and retention is regulated by the expression of functional CD44. Besides transcriptional/ translation regulation, we have also examined changes in CD44 function due to alternative splicing, CD44-cytoskeletal interactions, the role of CD44 ligand occupancy and, CD44 phosphorylation. Our studies have pointed to the involvement of a particular enzyme, casein kinase II (CKII) and that CD44 occupancy with its ligand HA results in enhanced CD44 phosphorylation. Disruption of CD44-HA interactions (by antisense approaches, HA oligosaccharides, decrease in CKII, cytoskeletal disruption) results in cartilage damage coupled with enhanced biosynthesis. In order to explore pathways that utilize CD44 to transduce changes in the matrix to alter chondrocyte metabolism, a yeast two hybrid (Y2H) screen was performed. The interesting outcome of this Y2H analysis was the discovery that Smad1, a signaling partner associated with bone morphogenetic protein (BMP) receptors, interacts with the cytoplasmic tail domain of CD44. No interaction was observed using a truncated CD44 cytoplasmic domain and no interactions were found between CD44 and Smad2 or Smad3. While there is precedence for protein presentation of Smad2, Smad3 as well as other transcription co- factors, at present, no proteins have been reported to sequester or present Smad1. The overall aim of this new proposal is to investigate the dual role of CD44 as a matrix receptor and a binding partner of Smad1 and how this role may represent a mechanism for cells to "sense" and "respond" to changes in their extracellular environment. CD44:Smad1 interactions may serve to either: 1) limit the availability of Smad1 for signaling (negative regulator) or; 2) serve as the anchoring site of membrane-bound Smad1 for presentation to BMP receptors (positive regulator). If CD44 serves in either role, alteration of the CD44-bound extracellular matrix (e.g., damaged matrix) or, modulation of functional CD44 may affect the cellular response to BMPs. Given the role that HA, CD44 and BMPs play in chondrogenesis, the function of HA: CD44:Smad1 interactions in stem cell chondrogenesis will also be investigated as a natural extension of these studies. Thus, this new paradigm of CD44: Smad1 interactions may provide a mechanism to explain how changes in the extracellular matrix can influence chondrocyte metabolism.